This January, Wisconsin contractor Novum Structural LLC pleaded guilty to defrauding the federal government by claiming it used materials manufactured in the United States for three major federally funded projects: a courthouse in Illinois, a transportation project in New Orleans, and the $2 billion Miami Intermodal Center. Yet a whistleblower demonstrated that Novum actually used cheap goods manufactured overseas in China, in violation of the 1933 Buy America Act.
For its part, Novum said the foreign-made goods only made up 3% of the various projects’ materials, but that it would accept “full responsibility” for the violation and penalties.
In a statement, Novum Vice President Travis Loften said, “It is important to note that the noncompliance relates solely to the country of origin of the products. At no time was there an issue with the quality of materials used. Novum has taken action to resolve the vast majority of non-compliance issues on all projects, including the Miami Intermodal Center…Today, the MIC is in full compliance with Buy America requirements.”
Although many people believe most U.S. manufacturing has moved offshore to places like China, there are still many American manufacturers pumping out Made in USA goods, from high-tech plastics to crane pads. According to the Antitrust Law Source, Made in USA labeling can be “a trap for the unwary.” Some states have even stricter labeling laws that go well beyond the Buy America Act.
For instance, until January 1, 2016, California’s Made in USA law stated that if a company uses even the smallest component manufactured elsewhere in their product then they could be liable for deceptive marketing.
California’s labeling law posed particular problems for food and beverage makers. Even U.S. companies that make their products in the country could be hit with class action lawsuits simply for using ingredients, produce, or spices imported from abroad. But in January 2016, an amendment signed by California Governor Jerry Brown eased some of these restrictions.
Now, according to Lexology.com, “the new law allows companies to label their products ‘Made in USA’ if either: (1) all the foreign components of the product constitute no more than 5% of the final wholesale value of the manufactured product; or (2) all the foreign components of the product constitute no more than 10% of the final wholesale value of the manufactured product, and the manufacturer of the product shows that it can neither produce the components in the United States, nor obtain the components from a domestic source.”